How employers can support an aging workforce as they near retirement

Written in collaboration with The Business Journal.

 

Right now, some of the most experienced employees in the workforce are preparing to leave — reducing their hours, stepping back from key responsibilities and heading toward retirement. Multiplied across the country, it can add up to one of the largest workforce shifts in U.S. history.

 

About 10,000 Americans turn 65 each day, according to Bank of America and the Global Coalition on Aging’s Workforce 2030: Adapting to the Age of Unretirement report.¹ Over the next several years, millions will reach retirement age, increasing the risk of talent gaps, knowledge loss and operational disruption as experienced employees make their exit.

 

The early signs are often subtle. A team lead may start handing off projects, or a senior employee might begin mentoring and training new hires. Roles evolve and teams adjust, often well before any formal retirement announcement.

 

When several long-tenured employees retire within a short period, however, the impact on the company becomes harder to ignore.

 

Retirement itself is also becoming more flexible, with about one in five retirees¹ continuing to work in some capacity. Within the same team, one seasoned employee may still be building savings while another of a similar age is actively planning to retire.

 

“The American workforce is aging, with more boomers in the workforce approaching retirement”, said Stacy Bucchere, Managing Director of Workplace Benefits at Bank of America. “Research shows that not all of these employees will be ready to retire, posing a dual challenge for employers: helping workers prepare for retirement while retaining the knowledge and experience they carry.”

 

Addressing both demands means building a workplace strategy that supports employees as they prepare for retirement while ensuring critical knowledge and experience are retained as they transition out of the workforce.

 

 

“It’s important for employers to support their retiring employees right up until their last day”, Bucchere said. That support looks different today than it did in the past.

 

For decades, workers moved directly from full-time roles to full retirement. That’s no longer the case. Instead of a clear exit, the transition happens over time, with many people moving into consulting, part-time roles or project-based work.

 

With more time to adjust, transitioning workers can walk teams through their processes, explain decisions and give newer employees context they might not otherwise have. Without that opportunity, teams are often left piecing things together after the fact. Work once handled by a single person gets split across a team, and details can fall through the cracks. Projects slow down, and managers step in to fill gaps.

 

Planning ahead makes that handoff easier to manage by giving experienced staff time to train others, answer questions and stay involved during critical transitions.

 

“Phased retirement models can extend the contributions of baby boomers and maintain institutional knowledge – and for businesses navigating a tightening labor market, that continuity can make all the difference”, Bucchere said.

 

This approach reduces disruption, lays the foundation for succession planning and allows businesses to manage change more deliberately instead of reacting after the fact.

 

 

One of the biggest risks tied to retirement is losing essential knowledge that isn’t documented. Experienced employees often know how to catch errors before they escalate, resolve urgent client issues and fix time-sensitive challenges when standard procedures aren’t enough.

 

When that knowledge is not passed on, teams are forced to relearn it through trial and error, slowing operations and placing greater pressure on newer employees.

 

Employers may need to fill more than 240,000 jobs each month¹ for the next five years just to keep pace with retirements, making those gaps even harder to manage.

 

The financial toll can be significant. Replacing an experienced worker can cost 50% to 60% of their annual salary¹ — and up to 200% when considering recruitment, training, severance, lost knowledge and reduced productivity.

 

Proactive planning can reduce that exposure significantly. Mentorship programs, cross-training and shared responsibilities give employees time to learn from each other before roles change. Some companies even stay connected with employees after they leave.

 

“Corporate alumni programs can help keep former employees engaged through mentoring, volunteering, continued learning and development” Bucchere said.

 

Instead of losing that expertise entirely, companies have a direct line back to it when needed.

 

 

Not all employees approaching retirement are in the same financial position. Some boomers have strong savings and a definite plan, while others are still paying off debt or building a financial cushion.

 

Roughly one in four boomers² don’t feel on track to retire, making continued employment a financial necessity rather than a choice.

 

Even within this group, readiness varies. One employee may have the flexibility to reduce their hours or retire soon, while another may need to keep working to cover basic expenses or maintain health care coverage.

 

Many older workers also underestimate how much they will need in retirement, with rising medical costs influencing when — and whether — they feel financially secure enough to leave the workforce.

 

“A one-size-fits-all approach to retirement benefits no longer serves today’s workforce,” Bucchere said. “Employees earlier in their careers need support building a financial foundation, while those closer to retirement may be looking for guidance and tools to help them plan confidently for what comes next.”

 

Benefits, guidance and planning resources should reflect the diverse financial circumstances employees face across different stages of their careers. In response, more organizations are expanding financial wellness programs³ and retirement-readiness tools designed to meet employees where they are.

 

When businesses align benefits with employee needs, they help support individuals in planning for the future and gain deeper insight into how their workforce is evolving — an area where Bank of America works closely with businesses of all sizes.⁴

 

 

Supporting an aging workforce means keeping the business moving as experience and responsibilities are transferred to the next generation of leaders.

 

Employers that act early — offering flexible retirement paths, comprehensive benefits programs and proactive knowledge transfer opportunities — will be better positioned to adapt. Those that wait may risk talent shortages, higher turnover costs and the loss of institutional knowledge that’s hard to replace.

 

Retirement is no longer an endpoint, but a transition. How companies support it may be one of the most important decisions they make in the years ahead.

 

Written in partnership with The Business Journals, by Sydney Wiederhold, Writer, TBJ Content Studio.

 

The views and opinions expressed are those of the writer, are subject to change without notice at any time, and may differ from views expressed by Merrill or other divisions of Bank of America. These materials are provided for informational purposes only and should not be used or construed as a recommendation of any service, security or sector.